High-level ministerial meetings with Indonesia will be cancelled and senior government sources say all aspects of the diplomatic relationship are "on the table" in the fallout from the Bali nine case.
Fairfax Media has also confirmed that the Abbott government will now almost certainly withdraw Australia's ambassador, while a former ambassador warned the two countries were facing their most serious rift since the East Timor crisis.
Remarkably, Indonesia still had not formally notified the Australian government of the impending executions of Andrew Chan and Myuran Sukumaran on Tuesday night just hours before they were due to take place – prompting a sharp response from Foreign Minister Julie Bishop.
"I am extremely disappointed that the Indonesian authorities have not yet formally advised the Australian government of the arrangements for the execution of two Australian citizens," she said.
Ms Bishop also expressed frustration and disappointment that Indonesian authorities had refused Chan and Sukumaran their choice of Christian pastors to witness their executions.
"It is deeply regrettable that Mr Chan and Mr Sukumaran have been refused permission to have a religious adviser of their choice present at the execution ... This would have been a comfort to them," Ms Bishop said.
Indonesia's behaviour over the Bali nine duo has provoked fury at the highest levels. Even seasoned Australian officials – serving and retired – are dismayed at Jakarta's apparently calculated moves such as announcing the executions on the 100th anniversary of Anzac Day and the overblown security measures when Chan and Sukumaran were being transferred between prisons.
A former ambassador to Indonesia, John McCarthy, said the issue would taint Australia's relations with President Joko Widodo personally for the remainder of his leadership.
"There's no question, at a sort of popular level, this is the most serious issue we've had since [East] Timor in terms of the way the Australian public looks at Indonesia and its actions," he said.
"We have to respond, quite seriously. We have been making representations at the highest levels for several months and these have been dismissed.
"The Indonesians have in some cases behaved quite badly in the way they've managed it."
The Abbott government is understood to be planning to cancel upcoming ministerial meetings, including key dialogues between defence, foreign affairs and trade ministers.
The most potent diplomatic measure likely to go ahead is the withdrawal of Australia's ambassador Paul Grigson, though this was unlikely to happen immediately as Mr Grigson would be helping the two men's families.
Mr McCarthy said the Abbott government should cancel major meetings for the rest of the year but cautioned against withdrawing Mr Grigson, saying it was better to leave ambassadors in place during such rifts to keep the channels of communication open.
Former Labor foreign minister Bob Carr likewise cautioned against such a withdrawal, saying it raised the difficulty of how and when the ambassador would return.
"It's a very busy embassy, our biggest, we have more diplomats there than in Washington and relations are even more complex and challenging. It is easy to pull the ambassador out, but harder to put him back in."
Indonesia's ambassador to Australia, Nadjib Riphat Kesoema, travelled to Indonesia last week. He is due to return later this week, apparently after the executions of Chan and Sukumaran were scheduled to take place.
A spokesman for the embassy said Mr Kesoema's departure from Australia had nothing to do with the execution schedule but was rather for "a number of previously arranged appointments".
